This Statement of Administration Policy provides the Administration's views on
S. 1033, the Agriculture, Rural Development, Food and Drug Administration, and
Related Agencies Appropriations Bill, FY 1998, as reported by the Senate
Appropriations Committee. Your consideration of the Administration's views
would be appreciated.

The Committee has developed a bill that provides requested funding for many of
the Administration's priorities. As discussed below, the Administration will
seek restoration of certain of the Committee's reductions to the President's
requests. We recognize that it will not be possible in all cases to attain the
Administration's full request and will work with the Committee toward achieving
acceptable funding levels.

The Administration is committed to working with the Senate to identify
reductions in the bill in order to find offsets for the restoration of funds
that the Administration seeks. For example, unrequested funds have been
provided to the P.L. 480 Title I account, and the Administration's proposed
user fees for meat and poultry inspection and new user fees for the Food and
Drug Administration have not been adopted. In addition, while we commend the
Committee for including the requested discretionary funds to operate the Crop
Insurance program, the Committee has added $53 million more than requested for
this purpose. These additional discretionary resources could be used to fund
higher priority programs. We urge the Senate to reduce funding for lower
priority programs, or for programs that would be adequately funded at the
requested level, and to redirect funding to programs of higher priority.

Women, Infants, and Children Program

The Committee bill would fund the Special Supplemental Nutrition Program for
Women, Infants, and Children (WIC) at $3.9 billion, $180 million below the
President's request. The Committee's mark is intended to support a
participation level of 7.4 million women, infants, and children, the
anticipated FY 1997 end-of-year caseload level. The President's FY 1998 Budget
request would allow program participation to grow modestly -- to 7.5 million by
September 1998 -- and fulfills the bipartisan commitment to fully fund WIC.
The request also includes a $100 million contingency reserve to ensure that
unanticipated food price increases do not cause participation decreases.

The Administration appreciates the recent action by the Congress to provide
supplemental funding to ensure stable WIC participation in FY 1997. We also
appreciate that the Committee bill provides needed flexibility in allocating
WIC funding to States. However, we are disappointed that the Committee mark
does not provide funding for the contingency reserve and for the modest
increase in participation proposed in the President's budget. These two
provisions would allow WIC to reach and maintain the bipartisan commitment to
full program participation.

The Administration shares the Committee's concern that WIC be able to maintain
its successful cost containment efforts. The Administration strongly supports
the Committee's inclusion of a provision to ensure competitive contracting of
infant formula based on the lowest net wholesale cost. Without such a
provision, infant formula costs could rise dramatically, increasing WIC's total
costs and putting budgetary pressure on other programs funded by Agriculture
appropriations.

Food Stamps

Unlike other major Federal entitlement programs such as Supplemental Security
Income and Medicaid, the Food Stamp appropriation does not include an
indefinite authority that would provide funding in the event of an economic
recession or estimating errors. Instead, the Congress has traditionally
provided a benefit reserve, or "cushion." While less than the requested level,
the Administration appreciates that the Committee recognized the need for a
benefit reserve by providing $1 billion for this purpose and urges the Senate
to provide the requested level of $2.5 billion, to the extent possible.

Food and Drug Administration

The Committee action would result in a total program level for the Food and
Drug Administration (FDA) of $1.0 billion: $913 million in budget authority
and $113 million in user fees. This level of funding for fees is, in total, a
net $132 million below the President's request. It is appropriate that
regulated industries that derive valuable benefits from some FDA activities
contribute an appropriate share of FDA's cost of ensuring the safety and
effectiveness of their products. The Administration urges the Senate to fund
FDA at the requested program level of $1.1 billion, offset by the proposed
user fees.

The Administration is also very concerned that the Committee bill includes
only $5 million of the $34 million requested to enforce FDA's rule intended to
reduce children's access to tobacco products and make the public aware of the
requirements. The Federal Government should move as quickly as possible to
reduce children's access to tobacco, and not make enforcement contingent upon
approval of a national settlement with the tobacco industry. Full funding of
the requested $29 million increase is essential to meet the Administration's
goal of significantly reducing under-age tobacco use.

Rural Housing Programs

We commend the Committee for including requested funds for single-family
housing direct loans and for increasing funds above the House bill's level for
the Rental Assistance Program (RAP). However, we ask the Senate to restore, to
the extent possible, the $52 million requested for RAP to convert expiring HUD
Section 8 rental assistance in USDA-financed rental properties to RAP
assistance. While Section 8 assistance is renewed annually, RAP generally
provides five-year contracts for rental assistance. On an annualized basis,
RAP assistance costs less than Section 8 assistance, and over five years the
conversion of these units in FY 1998 would save taxpayers $46 million.

Rural Development Programs

The Administration strongly supports and commends the Committee action that
would adopt the Administration's request to implement the Rural Community
Advancement Program (RCAP), as authorized in the 1996 Farm Bill. This flexible
delivery mechanism would allow States and localities to tailor rural
development assistance more effectively to meet unique local conditions and
needs. However, we urge the Senate to include funds for grants to States, as
authorized, in order to give States and localities the opportunity to better
tailor a portion of this assistance to their particular priorities.

Agricultural Research Programs

While we commend the Committee for including $1.25 million of the $2 million
requested for important Everglades restoration research, the Committee bill
does not appear to provide sufficient funding for a number of important
agricultural research initiatives. Only $8 million of the $12 million
requested is included for the Administration's Human Nutrition Research
Initiative, a multi-year initiative to improve the understanding of the
nutrition needs of diverse populations, notably children, but also including
the elderly, pregnant women, and healthy adults. The Committee bill provides
$100 million for the National Research Initiative (NRI) competitive grants
program, a $6 million increase over FY 1997 but a $30 million reduction from
the President's request. In order to provide funding for these important
activities, the Administration urges the Senate to reduce funds included for
unrequested, earmarked research grants.

Food Safety Initiative

While we commend the Committee's action to fully fund the FDA portion of the
request for the President's Food Safety Initiative that is within the
Subcommittee's jurisdiction, only $5 million of the $9 million requested
through the Department of Agriculture (USDA) has been funded. In May, the
Administration announced a detailed plan to strengthen America's food safety
through this initiative, including establishing a national early warning system
for outbreaks of food-borne illnesses; improving meat, poultry, and seafood
inspections; increasing research to develop new tests to detect food-borne
pathogens and to assess risks in the food supply; and, establishing
public-private partnerships to improve the public's understanding of safe food
practices. We urge the Senate to fully fund this important initiative.

Food and Consumer Service Studies and Evaluations

The Administration appreciates the Committee action to provide the requested
level for Food Stamp, Child Nutrition, and WIC program research. The challenge
of ensuring the success of welfare reform has increased the importance of
practical, applied, and timely research. The Committee's action would ensure
that the Food and Consumer Service research function maintains its close
connection to all facets of program operation, and its core of highly-skilled
professional career researchers with a well-recognized track record of
conducting and managing effective, objective program evaluations.

Outreach for Socially Disadvantaged Farmers and Ranchers

The Committee bill would significantly limit USDA's initiative to improve
efforts to ensure equal access for all clientele to training, technical
assistance, and other agriculture-related services intended to assist
low-income farm families in becoming successful producers. The Secretary of
Agriculture has stated his commitment to improving the Department's outreach to
and relations with its minority and socially disadvantaged clientele. The
Committee has provided only $2 million of the requested $4 million increase for
this important component of USDA's Civil Rights initiative. We urge the Senate
to increase funds for this priority program to the extent possible.

Micromanagement

The Administration objects to the inappropriate micromanagement of Executive
Branch authorities that the Committee bill would impose, which would impede the
ability of the Department to operate effectively. The Committee bill would
block facility closings of the Agricultural Research Service (ARS), which are
needed in order to channel resources effectively to improve the overall impact
and quality of ARS research. The bill also would limit funds for advisory
committees, task forces, panels, and commissions to $1 million, which is
insufficient to support ongoing and new committees, including those required by
the 1996 Farm Bill. We recommend that the limitation on expenditures for these
purposes be lifted.

The Committee bill would also prohibit FDA from consolidating two
laboratories: St. Louis and Baltimore. These consolidations are part of FDA's
overall streamlining efforts and are consistent with FDA's goal to consolidate
its field laboratory operations. The provision would force FDA to spend funds
on infrastructure that could otherwise be used more directly to protect public
health. The Administration urges the Senate to delete this provision.

Packer Concentration

The FY 1998 Budget proposes a $1.6 million increase for monitoring and
analyzing meat packer market competition and the implications of structural
changes and behavioral practices in the meat-packing industry. We urge the
Senate to increase funds to the maximum extent possible so that USDA can
maintain continuous, systematic collection and analysis of data along with
aggressive investigative activities to address these issues effectively.

Nutrition Education and Training

The FY 1998 Budget proposes $10 million for the Nutrition Education and
Training program. The Welfare Reform bill enacted last year replaced mandatory
funding for this program with an authorization for discretionary
appropriations. The Administration is disappointed that the Committee has not
provided the requested funding for this valuable resource to the child
nutrition programs. We urge the Senate to fund this important program to the
maximum extent possible.